CCIR collecting information on adherence to disclosure of conflict principles

The Financial Services Commission of Ontario (FSCO) is collecting information on behalf of the Canadian Council of Insurance Regulators (CCIR) to determine whether insurers and their brokers or intermediaries are following standards for managing conflicts of interest.
FSCO is collecting the information on behalf of regulators in Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
In 2006, the CCIR endorsed three standards for managing actual or potential conflicts of interest. They include priority of the client’s interest, disclosure of conflicts or potential conflicts of interest and product suitability.
The CCIR survey asks questions testing the adherence of companies and independent brokers to these standards. The insurance industry regulator is requiring all company CEOs and chief agents to sign off on the survey answers, which are due by Mar. 14, 2008.
The survey asks which distribution models companies are using; in addition, it asks companies what means they are using to monitor whether or not their intermediaries and/or independent brokers are complying with the three standards.
Nine out of the 23 survey questions deal with company policies and the review of these policies. Specifically, they query whether the company’s policies support and/or contain the three principles, and whether senior management is aware of these principles.
The survey also asks when companies have reviewed their policies in light of the principles and, if they have not done so already, when they intend to do so.
One mandatory question in the survey seeks to define the financial relationship a company has with its independent brokers, including loans, ownership interests, financial guarantees, commission overrides for portfolio transfers, non-monetary benefits such as trips, conferences, etc.
Question 24, which is mandatory for companies using independent brokers, asks companies to check off boxes showing various means they are using to monitor whether or not its independent brokers are following the three principles.